The risks that could influence our future operating results, stock prices, financial condition, and so on are as follows. The matters expressed in this document are the conclusion of our corporate group as of May 14, 2019.
Risks associated with economic conditions
The core business of our corporate group is building facility maintenance, with reform and construction playing a supplementary role. Currently Japan's business climate is experiencing a slight upturn, but client demands for the lowering of maintenance costs could intensify due to cost reviews and the intensification of competition for new orders, affecting company performance.
Risks associated with maintenance / construction accidents or disasters
The services we provide for our clients include building facility maintenance with reform and construction. During service delivery, construction, or at other times, there is a risk of loss or client inconvenience due to human error by employees. Regarding equipment installation, there is the possibility of having to undertake repair work due to defect liability within a specified period after installation. Litigation in connection with such incidents could also occur. We diligently avoid these risks by carrying liability insurance, but losses not covered by insurance and weakened brand power through loss of confidence could affect company performance.
Risks associated with regulatory requirements, business practices, and management policies
For building facility maintenance with reform and construction of government related projects, we participate in a bidding system for orders and contracts. There are risks due to changes in that system's participation qualifications and so on. Losing the opportunity to bid, introduction of a designated management system for the privatization of government enterprises, and the possible resulting loss of orders due to order disbursement could all affect company performance.
Risks associated with international expansion
We expanded into China, Bangladesh, Singapore, Thailand, Malaysia, Vietnam, and Myanmar. Our further international expansion will focus on Asia. Conditions such as these countries' political situations, economic disorder, and unforeseen currency fluctuations could affect our business performance.
Risks associated with the labor shortage
Japan’s working-age population is shrinking, causing the hiring environment to become increasingly competitive. This could prevent us from recruiting sufficient manpower. As a result, our technological and service-supplying capabilities could decline, potentially causing us to lose the trust of our customers. The general shortage of manpower could also cause the working environment to worsen. Combined with other factors, including an increase in the number of employees resigning, this could leave us with a shortage of technicians, or an increasingly patchy and unevenly-distributed technician workforce. This in turn could negatively impact the Nippon Air Conditioning Group’s business results.